Dollar falls to a 3-month low against the yen – On Thursday, the dollar fell to a three month low against the yen as traders listened to comments from Jerome Powell, Federal Reserve Chair, that suggested interest rate hikes could be slowed down “as soon” as December.
The dollar-yen exchange rate is very sensitive to long-term U.S yield changes
The overnight drop in equities to 3.6% was almost two months long.
Powell stated at the Brookings Institution, Washington, that slowing down at this stage is a good option to balance the risk. He also said that inflation control “will require that policy be kept at a restricted level for some time.”
At 137.39 yen, the greenback was 0.4% lower
Hopes of a slowing U.S. rate increase helping Gulf stocks to gain
After earlier dropping to 137.27, the Asian morning saw yields of 10-year Treasury notes at 3.62% in Tokyo.
“Market participants seem to have interpreted Powell’s speech as moredovish than hawkish,” Kim Mundy, a strategist from Commonwealth Bank of Australia, said in a client letter.
“The reaction supports markets’ apparent glass half full’ approach to the current economic outlook.”
Current market expectations are that the Fed will slow to a 50-basis point rate increase Dec. 14 and then decrease to 91% for another 75 basis points.
The dollar fell 7.15 percent against the yen in November as investors prepared for a Fed pivot.
The dollar index
The currency is measured against six major peers, including the yen and the euro. Wednesday’s drop of more than 1% was extended into Thursday. It dropped as low as 105.69. It plunged 5.2% in November — its worst monthly performance since September 2010.
The euro
Sterling rose 0.2% to $1.04325
Increased by 0.23% to $1.2086
A European survey released Wednesday found that inflation in the eurozone fell more than anticipated in November. This raises hopes that skyrocketing price growth may be past its peak. It also supports, if it is not already, the case for a decrease in European Central Bank rate increases next month.
The Australian dollar helped to gain the risk-sensitive Antipodean currencies
Last 0.17% higher at $0.6800 after previously touching $0.68145 for first time since Sept. 13. New Zealand’s Kiwi
The highest increase since Aug. 17 was 0.32%, $0.63175,
Australian and Kiwi have been buoyed also by signs that the Chinese government is rethinking its strangling Zero Covid policy. This follows the announcement of an easing in curbs in Guangzhou and Zhengzhou (the site of the Foxconn iPhone factory).
